How to Handle Debit Memos in Accounting

What should the purchasing department send to the accounting department when the shipping department returns nonconforming goods to a vendor?

A. Unpaid voucher

B. Debit memo

C. Vendor invoice

D. Credit memo

Answer:

The correct option is (b). When the shipping department returns nonconforming goods to a vendor, the purchasing department should send to the accounting department the Debit memo.

Debit memos, also referred to as debit notes, are used to correct invoices. If you accidentally send an invoice that is too low, you can send a debit memo to increase it after it has been issued. The customer can then make adjustments to their books using the note.

A buyer can formally request a credit note from a seller by sending them a debit note or debit memorandum. The debit note serves as the purchase returns diary's primary source document. It demonstrates that costs have fallen, in other words.

Handling debit memos is an important part of accounting procedures to ensure accurate financial records and transactions. It is crucial for maintaining proper documentation and communication between different departments within an organization. By understanding the purpose and process of debit memos, companies can effectively resolve issues related to nonconforming goods and invoice corrections.